When I purchased my Kindle, the first thing I did was throw some PDFs on it to check out how well they displayed. While the Kindle natively supports PDFs, it still leaves much to be desired—I wasn't able to adjust the font size or use the dictionary and highlighting features. While most PDFs rendered correctly, the text was just too small to read and was hardly usable. Fortunately, there are couple ways to convert a PDF to make it act and feel like a regular Kindle eBook.
1. One solution uses Amazon's own conversion tool. First you need to send the PDF to your Kindle e-mail address (you can find your e-mail address at Amazon.com under My Account / Manage Your Kindle). Make sure that the e-mail address you're sending from is on "Your Kindle Approved E-mail List," otherwise your sent e-mail will be blocked and won't go through (this is setup to avoid spam). Then simply e-mail your Kindle (email@example.com) with the PDF as an attachment. In the subject line put "Convert" and leave the body blank. It takes a few minutes to get everything converted and sent. There is a $0.15 fee if you send it over 3G, but it's free over WiFi.
For me, this method has been hit or miss with no real way of knowing if everything has been converted and sent correctly. I have had some e-mails returned saying that the PDF file was corrupt, but when I tried sending the same file over again, it'd end up converting successfully.
2. Another more consistent method is using a free application called Calibre. Calibre is a cross platform application that works for Windows, Mac and Linux. While Windows users have a bit more eBook conversion software to choose from, for Mac users, Calibre is the go to app. You can download the app at //calibre-ebook.com. Once installed, you can either have Calibre convert a PDF or even an ePub book to a Kindle-friendly .mobi file. From there you can send it wirelessly through your Kindle email address (like above) or connect your Kindle through USB and simply drag the converted file over.